Melrose looking to higher earnings

The company raised its interim dividend by 38 per cent to 4 pence per share.

Melrose's better-than-expected half yearly results prompted some brokerages, including JP Morgan Cazenove and Investec Securities, to raise their outlook on the company.

The company's energy division and Dynacast business, which makes die-cast metal parts, saw the strongest performance, finance director Geoffrey Martin said. "Order book was up 9 per cent to 10 per cent across the group," Mr Martin said.

Melrose, which has grown by buying underperforming businesses, said it was looking to buy a manufacturing or engineering business for up to 1bn.

Crane, cable and hooks maker FKI, which it bought for 1bn in 2008, had generated about 440m cash since the buyout, Mr Martin said.

"We are starting to see an improvement in the market for disposals," Mr Martin said, adding that the company had no immediate plans to sell any of its businesses.

Melrose also had its highest adjusted operating margins ever at 13.6 per cent, up from the 10.2 per cent a year ago. "We believe the group is now capable of reaching and sustaining at least 15 per cent operating margins," Investec Securities said.

For January to June, the company adjusted pre-tax profit of 78.1m, compared with 53m a year ago.